Rwanda and the European Union are pushing for a capital-based investment approach to foster their relations.
Rwanda and EU also intend to bypass Economic Partnership Agreement (EPA) that has stalled between Europe and the East African Community.
Under the new approach that will focus more on trade and less on politics, Europeean parliament in February passed a plan to invest $37 billion mainly in Africa and some EU’s neighbouring economic blocs.
Government and EU representatives last week met to discuss the best way Rwanda can exploit this new initiative.
In the deal, Europe wants Rwanda to guarantee reduced risks for European investors — a deal that Rwanda is willing to offer on condition that more capital investments are also guaranteed.
Rwanda also wants more technological transfers from Europe to ensure value addition to its exports — especially coffee and other agricultural producers — which will enable favourable competition with European producers.
Access to funding
“What we have agreed in this new plan is to attract more capital investments from the EU because private investments are the biggest catalysts of economic growth. But also, we want to access funding from the EU. For example, how do you get the European Investment Bank to invest more here,” Clare Akamanzi, chief executive of Rwanda Development Board said.
“We are also looking into reducing the risk, or at least how they perceive the risk for EU investors. We also talked about providing guarantees for some EU projects that are invested in the country.”
Europe, however, is still in support of the Economic Partnership Agreements, and does not consider the new approach as a replacement.
“Our intentions are not to disrupt this EAC Customs Union, but if Rwanda decides to organise itself in a slightly different way, we are ready to talk,” European Union Commission director general Stefano Manservisi said in an interview.
“If Rwanda is able to convince other countries to sign EPA, it would work in the interest of its agenda. If not, we will keep working bilaterally because in any case, we agreed that exports must go on without any exemptions under a tax and quota free arrangement.”
Rwanda and Kenya signed the EPA with Europe in September 2016 as they sought to secure duty free and quota free market access to the EU. Other East African Community member states have not signed.
The United Nations Economic Commission for Africa released research findings last year showing that the agreement would reduce welfare in the region, with Kenya being the hardest hit with a $45 million loss, while the EU would register a welfare gain of US $212 million.